Proposals aim to modernise Island’s rates system

Thursday, 28 February 2019

A consultation has been launched today (28 February) to gain feedback on specific proposals to modernise the rates system. This work is an action from the Programme for Government and will inform a debate in Tynwald in June. It also builds on the feedback provided in the 2015 consultation.

The current system is based on the Rates and Valuation Act 1953 using historic rental values. Rates calculations are based on what a property could have been rented out for in 1969, in a good state of repair with the landlord meeting insurance, tax and maintenance costs. Properties built or extended after 1969 are given a value of a comparable property built before 1969.

A proposal to change the way non domestic and domestic rates are calculated and other aspects of rates modernisation will be debated by Tynwald in June.

The Government will propose that in future, rates are based on the size in square metres of all the floors in a building, with several aerial views and software used to measure each property initially. If this proposal is agreed by Tynwald then it is expected this methodology will be introduced with legislation in the 2019/2020 sittings, and revaluations carried out in coming years.

Other matters tackled in the consultation, and what to do about them, include the unequal distribution of non-domestic rates around the Island, the operation of businesses from domestic properties, charitable use, dilapidations, single occupancy, prompt payment and ability to pay.

Minister for Policy and Reform, Chris Thomas MHK, said:

‘Tynwald agreed in October 2018 that water and sewerage will be priced using an all-Island CPI-linked rate for the next five years. This increases the pressure to modernise the current rates system which is out of date and unfair. So the real issue is how to deal with this, and how to transition to an appropriate and fair system. This consultation will inform that practical decision.’

He added:

‘Having rates based on property area will provide consistency across the Island. Rates revaluation was carried out in Guernsey using this system at a fraction of the £2 million Tynwald approved for a traditional revaluation in 2015. Keeping the rateable values up-to-date would be easier and cheaper too, so we wouldn’t go nearly 50 years before the next comprehensive review, as has happened.’

‘It is also paramount that we address the unfair distribution of non-domestic rates across the Island, as well as the many other challenges that exist around the efficient and effective use of the £48 million plus raised and spent using the rates system.’

The consultation opens today for eight weeks and in addition, a series of workshops will be held with local authorities and other stakeholders. The results of the consultation will be published before the debate in June.